KATHMANDU, July 11 : Nepal Rastra Bank (NRB) is set to unveil the monetary policy for the upcoming Fiscal Year at 1:30 PM today. Governor Dr Biswo Nath Paudel will unveil his first policy from the central bank’s new building in Baluwatar, two weeks earlier than the traditional schedule to ensure alignment with the new budget’s implementation from mid-July.
The upcoming policy emphasizes reviving credit demand by easing loan procedures and reviewing current lending standards. Despite high liquidity and low interest rates, credit demand remains sluggish—prompting NRB to revise loan-related criteria to make borrowing more accessible. The policy will also consider reopening the licensing process for new commercial banks, which has remained frozen since 2010. Foreign banks, which were previously limited to wholesale banking, could be allowed to enter Nepal’s retail banking market.
Revised interest rate corridor system introduced
Significant changes are expected in the regulation of working capital loans, with plans to revise the existing guidelines and allow more flexibility while curbing misuse. Commercial banks will also be categorized based on risk, governance, capital adequacy, and board effectiveness. High-performing institutions will be granted more autonomy under a self-regulation framework.
Additionally, the policy is expected to simplify interest rate controls and reassess provisions related to priority sector lending. Measures to encourage foreign investment will be introduced by easing capital inflow procedures. In line with the federal budget, the policy will address the operational framework for neo-banks and asset management companies. A review of past bank mergers and their outcomes will also be conducted.
To support financial inclusion, the policy will introduce provisions aimed at small-scale customers and borrowers. The formulation process included consultations with former governors and senior bank officials to ensure a comprehensive and informed approach.
